Harnessing AI and EI to Boost Credit Union Efficiency and Member Experiences

Contributed By: Sam Das, Managing Director, TruStage^TMVentures

Credit unions, like people, have varying strengths in different kinds of intelligences. Traditionally, the credit union creed of people helping people gave the industry strong roots in Emotional Intelligence (EI). With modern applications of Artificial Intelligence (AI) strengthening service and efficiency, there is a lot to be gained. Both categories of 'intelligence' have distinct differentiators. AI is the capability of computers to do activities that previously needed human-level intelligence. EI, on the other hand, is the ability to empathize between two parties.

A common misunderstanding is that AI-powered systems can handle the emotional challenges of member relationships; however, finances are very personal. Systems can be trained to show sensitivity to some extent, but they can't feel and think the way humans do. AI cannot replace authentic emotional connections that enrich human interactions - the type of experience that has differentiated credit unions from competitors for decades.

AI presents a big opportunity for credit unions but shouldn't replace EI. It's the strategic combination of AI and EI that can lead to greater efficiency gains and better member service.

Developing a Strategy Around AI

A credit union should have a plan before using AI. Start with assembling a diverse team of subject matter experts (SMEs), business champions, IT professionals and compliance officers.

SMEs, for example, are tasked with staying on top of current trends in technology and knowing what will be required of the IT and compliance teams to integrate these solutions. They're also aware of how this technology impacts the financial regulatory landscape. Whereas, business champions are crafting the business case, as well as mapping the member and financial impact AI will have on the credit union.

This strategy team is responsible for integrating AI into operations and company culture, ensuring it aligns with regulatory standards and the organization's mission.

Exploring Potential Use Cases

As with most new technologies, it's easiest to begin by addressing a few use cases. AI has the potential to increase efficiencies, enhance member experiences, and optimize a credit union's existing talent and resources. Once credit unions see success with these use cases, there will be an appetite for more.

Connecting with a fintech is an easy way to start. Take Posh AI for example, a leader in conversational and generative AI solutions for the financial industry. Where many credit unions struggle between limited hours for contact centers or expensive after-hours support, digital assistants and virtual assistants can provide members with around the clock service at a fraction of the cost. Posh's digital assistant can handle questions related to the branch, products and services, and member account information. As a result, the credit union improves member satisfaction and gains efficiency.

Another use case is AI-powered knowledge management solutions. These solutions learn from a credit union's policies and procedures to create a database of commonly asked questions and answers. Rather than manually searching or messaging peers, staff receive instant responses within seconds through Posh's conversational interface. In this scenario, employees are empowered to be of better service, which enhances member experience and efficiency gains.

AI Education

After deciding on the strategy and initial use cases, the AI team should educate their employees and begin to develop a culture that acknowledges how the organization will benefit from AI. This requires support from leadership.

It's also important to educate the board and senior leadership on how AI can transform the organization. This is an opportunity to address any misinformation and differing opinions. A concise approach, and support from the credit union management team will go a long way. In fact, it's likely that many board members are waiting for an approach to AI, or at least be excited by it.

Risks of AI

There is risk involved in credit unions choosing whether to use AI solutions. It's up to the credit union to determine if the risks outweigh the benefits.

A lack of education or alignment on use cases will prove to be harmful. Prioritizing education enterprise-wide will help credit unions avoid misaligned expectations of the technology and what it will achieve. For example, open-AI models like ChatGPT aren't ready to support credit unions in solving member inquiries, they use outside information. However, their models can be constructed with guardrails to understand member behavior through transactions and money movements. Part of a credit union's AI strategy should address risk and guardrails.

Avoiding AI due to these risks may make credit unions vulnerable to changing environments. Take the fraud landscape, cybersecurity threats are becoming increasingly sophisticated. From credential stuffing to phishing threats, fraudsters are using AI. If credit unions don't deploy tools of similar strength to safeguard their organization, they will find themselves at a disadvantage. AI is not only a strategic advantage but a necessity for the future.

Finding the Right Fit

Credit unions are under constant demand to be more efficient and scale while keeping their competitive differentiators. Leveraging AI can help in this battle by supercharging interactions, experiences and tasks. It can automate mundane and routine tasks, allowing staff to focus on more complex and sensitive financial situations. Humans excel at problem-solving, building relationships and demonstrating empathy, they are the best source of EI. AI tools can enable employees to concentrate on strategy, member experience and delivering the personal touches that credit unions are built upon.

Interactions likely to elicit emotional responses from members, like dealing with financial stress or making a critical financial decision, should be handled personally. This is where the concept of "human in the loop" becomes essential. With the right guidelines, AI systems operate up until a basic level of service is met, then facilitate a seamless transfer to an employee. This scenario works for customer service, fraud mitigation, loan approvals, and countless other processes. In each case, employees are able to contribute in ways that maximize their value and output.

The core mission of credit unions remains centered on human interactions and EI, but the industry needs advanced technologies like AI to manage the demands of a 24/7 culture, increasing cybersecurity demands, compliance, and much more. By leveraging AI to handle routine tasks and preserving EI for personalized service, credit unions can boost operational efficiencies while ensuring that members feel valued and supported. Such a dynamic balance presents credit unions with the opportunity to revolutionize the member experience and stay competitive in today's marketplace.

To learn more about how AI and Emotional Intelligence can transform your credit union operations, listen to the full podcast episode on ACU's The CU Lab featuring Sam Das, Managing Director of TruStage Ventures, and CEO of Posh AI, Karan Kashyap.

To get more information on products and services offered by TruStage, contact Frank Taddeo at [email protected].

The views expressed here are those of the author(s) and do not necessarily represent the views of TruStage.

TruStage^TM is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, Wis.

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